After four months, LPR was finally lowered again.
On May 20, the latest published loan market quoted interest rate (LPR) results showed that the one-year LPR was 3.7%, unchanged from the previous time; Varieties with a maturity of more than 5 years reported 4.45%, up from 4.6% last time, down 0.15 percentage points from the previous time.
This is four months after the decline of 10 basis points and 5 basis points for LPR over one year and five years respectively on January 20 this year. Different from previous LPR downlink, the latest LPR downlink has two characteristics:
First, the “linked” medium-term lending facility (MLF) interest rate has been lowered while it has remained unchanged in the near future. Although this is not the first time, combined with many measures taken by the people’s Bank of China in the market-oriented reform of deposit interest rate since April, the strong correlation between the change of LPR and MLF interest rate is loosening.
Second, only varieties with a maturity of more than 5 years go down alone. This is related to the reform of deposit interest rate mentioned above, because the new deposit interest rate lowered by many banks in April is mainly aimed at the interest rate of three-year time deposit; At the same time, it is also regarded as the “supplementary reduction” of varieties with a period of more than 5 years. After this adjustment, the price difference between varieties with a period of more than 5 years and LPR with a period of 1 year was compressed from the high of 90 basis points to 75 basis points.
As the pricing benchmark of various loan interest rates of banks, the reduction of LPR over 5 years is really good for reducing the loan repayment interest of enterprises and individuals. Compared with the one-year LPR adjustment, which mainly affects liquidity loans (mainly corporate short-term liquidity loans and personal short-term consumer loans), the reduction of 5-year LPR will have a greater coverage for reducing the financing cost of the whole society, especially for individuals under housing loan pressure, it will directly reduce the monthly mortgage interest to be repaid (of course, when to reduce the interest expense depends on the repricing date of the loan interest rate specified in the housing loan contract). This is also seen as another important measure of the recent steady growth policy, which aims to further reduce the financing cost of the real economy, improve the cash flow pressure of enterprises and individuals, stabilize consumption and expectations, and enhance market confidence
Or affected by this, the three major A-share indexes opened higher, with the Shanghai index up 0.33%, the Shenzhen composite index up 0.55% and the gem up 0.77%. Real estate stocks rose, with China Wuyi Co.Ltd(000797) up nearly 3% and Poly Developments And Holdings Group Co.Ltd(600048) up nearly 2%. The Hang Seng Index rose to more than 2%, and the Hang Seng technology index rose 3.5%. As of press time, the net inflow of funds from the North has exceeded 5 billion yuan.
FTSE China A50 Index futures rose to 2%.
lpr where is the driving force of “interest rate cut”
The LPR quotation on May 20 is the second reduction of this year. In fact, the market has long expected this adjustment, which is mainly based on many new measures taken by the central bank to reduce the cost of bank liabilities in April.
On the one hand, in April this year, the central bank guided the interest rate self-regulation mechanism and established a market-oriented adjustment mechanism for deposit interest rates. The member banks of the self-regulation mechanism reasonably adjusted the level of deposit interest rates with reference to the bond market interest rate represented by the yield of 10-year Treasury bonds and the loan market interest rate represented by 1-year LPR. This is a major adjustment to the self-regulation pricing mechanism of deposit interest rate again after the self-regulation upper limit of deposit interest rate was formed by multiplying the benchmark deposit interest rate by a certain multiple and determined by adding a certain base point in June last year.
On the other hand, the reporter of the securities times learned that in order to encourage banks to actively refer to the new deposit interest rate self-discipline pricing mechanism and timely adjust their deposit interest rate level, the central bank set this as an additional item in the macro Prudential assessment (MPA).
These reforms have brought immediate results. According to the latest monetary policy implementation report of the central bank, state-owned banks such as the postal savings bank of China Construction diplomatic relations between industry and agriculture and most joint-stock banks have reduced their fixed-term deposits with a term of more than one year and the simple interest rate of large deposits in late April, and some local legal person institutions have also reduced accordingly. In the last week of April (from April 25 to May 1), the weighted average interest rate of new deposits in financial institutions across the country was 2.37%, down 10 basis points from the previous week.
Everbright Securities Company Limited(601788) chief banking analyst Wang Yifeng said that the deposit interest rate self-regulation mechanism encouraged banks to reduce the interest rate of some term time deposits by 10 basis points in April, aiming to further reduce the burden on banks from the middle and long-term side of liabilities; From April to may, the overnight and 7-day interest rates continued to operate away from the center of the interest rate corridor, and the inter-bank certificate of deposit interest rate significantly decreased by more than 30 basis points compared with the peak in March. These positive factors helped to improve the cost of comprehensive liabilities of banks from both ends of general deposits and inter-bank liabilities. According to the marginal cost method, it can directly drive the LPR quotation downward in May.
personal mortgage interest expense decreases again
The reduction of LPR over 5 years is the most concerned by the market. Compared with the one-year LPR adjustment, which mainly affects liquidity loans (mainly short-term corporate liquidity loans and personal short-term consumer loans), the five-year LPR reduction has a greater coverage of reducing the financing cost of the whole society. With the advance of previous LPR reform, the vast majority of bank stock loans and newly issued loans, such as personal mortgage loans and medium and long-term corporate loans, use 5-year LPR as the pricing benchmark of loan interest rate.
According to the regulations of the central bank, individual mortgage borrowers and lending banks can negotiate and choose interest rate repricing (usually the shortest period is 1 year). Each time the interest rate is repriced, the pricing benchmark is adjusted to LPR of the corresponding period of the latest month Since the LPR over 5 years was lowered once on January 20 this year, for individuals whose mortgage interest rate repricing date is before May 20, the interest expenditure of this year is still adjusted based on the LPR over 5 years; For individuals whose interest rate repricing date is after May 20, they can “enjoy” the “benefits” brought by the latest LPR reduction over a five-year period this year.
It is estimated that according to the loan amount of 1 million, the term of 30 years and the repayment of equal principal and interest, the LPR over 5 years will be reduced, the average monthly supply can be reduced by nearly 89 yuan, and the total amount of interest to be repaid will be reduced by more than 30000.
More importantly, the recent new deal will lower interest rates for mortgage applicants who are about to buy their first house. On May 15, the central bank and the China Banking and Insurance Regulatory Commission issued a document that the lower limit of the interest rate of commercial individual housing loans for the first set of housing is adjusted to not less than the quoted interest rate in the loan market of the corresponding period by 20 basis points for the resident families who borrow money to buy ordinary self owned housing. At present, many cities have followed up quickly and reduced the first house loan interest rate to 4.4%. With the latest reduction of LPR over 5 years, it is not ruled out that the first house interest rate will be further reduced on the basis of 4.4%.
expert recruitment and steady growth increment policy
Half of the second quarter has passed, and the downward pressure on the economy has further increased under the impact of more than expected factors. Many experts recently called for the introduction of incremental measures to stabilize growth as soon as possible. Some scholars even called for “taking some policies at all costs to ensure people’s livelihood and stabilize the economy”.
Zhang Ming, deputy director of the national finance and development laboratory and deputy director of the Institute of finance of the Academy of Social Sciences, said at the salon held by the International Monetary Research Institute of Renmin University on May 19 that a core problem of China’s macro-economy is the lack of demand of micro subjects, and behind the lack of demand is the lack of confidence.
Due to insufficient demand and confidence, liquidity support alone is not enough. At this time, we should not only introduce more expansionary macro policies, but also avoid continuing to introduce contractive policies. Fiscal policy should be more relaxed, especially the central government should issue special treasury bonds to do some important operations. Monetary policy should be more relaxed to match the implementation of loose fiscal policy. Higher inflation is still half a year away from us, and the stage of rapid depreciation of RMB exchange rate has ended. Therefore, neither inflation nor exchange rate constitute constraints to continue to relax monetary policy in the short term.
Cwm50 suggested that fiscal policy should be more active and promising. On the one hand, make good use of the fiscal policy of making full use of the stock; On the other hand, we can consider issuing 2 trillion special treasury bonds to provide financial support for coordinating epidemic prevention and control and economic and social development, and issuing cash subsidies or “consumption vouchers” to specific groups. The monetary policy timely lowered the policy interest rate and guided the financing interest rate of the real economy to further decline; Pay more attention to the role of aggregate monetary policy tools and promote the growth of credit scale, especially medium and long-term loans. In addition, we should coordinate fiscal and monetary policies and make concerted efforts. In addition to the interest rate reduction of monetary policies, financial support should also increase support for the financing of enterprises and entities that have been greatly impacted, implement financial interest discounts, guarantees or increase the cancellation of non-performing loans; Expand the scope and intensity of discount interest on inclusive loans for small and micro enterprises, and continue to reduce the financing cost of small and micro enterprises in line with monetary policy.
In terms of increasing the interest discount on loans to small and micro enterprises, Wang Yifeng also believes that affected by the epidemic, many small and micro enterprises are facing great difficulties in production and operation, and the operating cash flow is under great pressure. The deferred repayment of principal and interest on loans is only deferred repayment, but it does not reduce the interest payment pressure of small and micro enterprises themselves. Some enterprises stop production and have no operating income, but still need to repay bank interest. Therefore, it is suggested that for small and micro enterprises that encounter special difficulties in operation, appropriate financial interest discount or interest reduction can be considered to effectively reduce the debt repayment burden of enterprises.
In addition, it is still necessary to continue to increase the traction and driving effect of infrastructure investment on effective financing demand. Chen Daofu, deputy director of the Financial Research Institute of the development research center of the State Council, told reporters that it can be considered to appropriately advance in hospitals, warehousing and logistics, smart grid transformation and other aspects, increase infrastructure investment, expand the support of policy financial institutions, and improve the proportion of capital that can be used as capital. At the same time, accelerate the construction of affordable housing, explore affordable housing REITs, form effective investment, inject credit funds and provide certain cash flow to real estate enterprises
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